I was interested to read an Employment Tribunal case recently whereby a woman who had been employed on a 12 month fixed-term contract has successfully pursued a claim for unfair dismissal and sex discrimination. It is reported that the woman had been informed verbally that the contract would be renewed at the end of its term but, following her announcement that she was pregnant, she was informed the contract would not be renewed. She pursued her claims in the Tribunal on the basis that the non-renewal of the contract was due to her pregnancy and received an award of around £25,000 which included an injury to feelings award of £15,600.
This case reminded me of a number of matters that I have dealt with whereby employers are under the misconception that at the end of a fixed-term contract the employment simply comes to an end without any risk. After all, the contract was for a fixed term period. Right?
Wrong.
Under statute the expiry of a fixed-term contract, which is not renewed, amounts to a dismissal. In order for this dismissal to be fair it must be for one of the potentially fair reasons listed within statute. Namely – capability, conduct, redundancy, contravention of a statutory obligation or some other substantial reason. If the reason for dismissal is not due to one of these reasons, and the employee has a minimum of two years length of service, then they would be able to pursue a claim for unfair dismissal.
Furthermore, if the reason for dismissal is related to one of the protected characteristics within the Equality Act 2010 (in this case sex) then regardless of length of service the employee would potentially have a claim for discrimination.
As such, it is important when dealing with fixed-term contracts that an employer does not simply think that it is due to expire and no further consideration need be given. This will constitute a dismissal and therefore the risk to the business needs to be assessed including consideration being given to the reason the contract is not renewed, the length of the employee’s service and whether there are any potentially discriminatory grounds. In addition there may be other factors to consider – for example, if the contract is not being renewed due to redundancy then whether there are any suitable alternative roles and whether a redundancy payment is payable.
A final point that is worth noting is in respect of the procedure. Whilst the ACAS Code of Practice on Disciplinary and Grievance Procedures does not apply to the non-renewal of fixed-term contracts, when considering the overall reasonableness of the dismissal, a Tribunal will consider the fairness of the procedure followed in the dismissal. As such, depending on the individual circumstances of the matter, it may be recommended that the ACAS process is applied.
Therefore, in conclusion, what is the moral of the story? Be careful when deciding not to renew a fixed-term contract. The reason for dismissal must be a fair reason, as stipulated within legislation, otherwise you could face a claim for unfair dismissal. Also take particular care if an employee has a protected characteristic because, if this is attributable to their dismissal, you could also face a claim for discrimination.
Should you have any queries in respect of the content of this article, or any other employment related issue, please do not hesitate to contact one of our employment solicitors on 01733 888888 or employment@buckles-law.co.uk and they will be happy to assist you.
